New wave of Arab investments boost African markets

Arab investors are spreading their investments to north and sub- Saharan Africa as a result of an economic boom in the Middle East countries, which has resulted in the search of the high returns that are becoming harder to find in saturated western markets.
Middle investors are keen to expand their investments into new markets as the banks and financial institutions in the Arabian Gulf are overflowing with liquidity. Consequently, there have been many joint ventures, mergers, acquisitions and reverse takeovers in Africa that are backed by capital surpluses and local and international loans secured by land holdings in the Gulf.
“Many of these companies are generating very high cash returns,” says Walid Shiabi, head researcher at the Dubai-based Shuaa Capital. “And in a lot of cases, they are beginning to outgrow their own markets and are looking elsewhere to expand.”
Many deals in the African property and telecoms sectors have dominated the news in recent years The rapid growth of Middle Eastern economies has provided investors an opportunity to reduce their exposure to domestic markets by expanding into the African markets and beyond. However, there has also been substantial expansion into other sectors in African countries like hotels, supermarket chains, airlines, transport logistics and commercial and investment banks.
The recent announcement by Istithmar, the Dubai-based investment holding company, and London & Regional Properties, the UK investment group, that it had bought Cape Town’s prestigious V&A Waterfront for R7.04 billion ($910m), suggests that other Middle East investors are thinking along similar lines.
“Building a pan-African brand lies at the core of our corporate strategy,” says Marten Pieters, Celtel’s CEO. “Africa’s borders are colonial, they do not reflect economic or linguistic relations, so there is a lot of inter-country traffic, and that is where the opportunities lie.